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The RBI has approved a composite merger scheme proposed in December 2021 by the Shriram Group, which would create a substantially large NBFC.
The Shriram Group is a financial conglomerate that started operations over 30 years ago with a Chit Funds business. Today the company offers Commercial Vehicle Financing, Consumer & Enterprise Finance, Retail Stock Broking, Life Insurance, General Insurance, Chit Funds, and Distribution of Investment & Insurance Products.
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The Group includes the following companies: Shriram General Insurance (SGIL), Shriram City Union Finance (SCUFL), Shriram Life Insurance (SLIL), Shriram Capital (SCL), Shriram Asset Management Company (SAMCL), Shriram Fortune Limited (SFL), Shriram Housing Finance Limited (SHFL), Shriram Transport Finance Company (STFCL) & Shriram Properties.
"We wish to inform you that Reserve Bank of India via its letter dated June 15, 2022, has issued No Objection to the Scheme with usual and normal conditions as generally stipulated in such similar approvals," STFCL said in a regulatory filing.
The proposed merger scheme is to merge Shrilekha Business consultancy with Shriram Capital & merge SCL(Shriram Capital) and SCUFL(Shriram City Union Finance) with STFCL(Shriram Transport Finance Company). This merger would allow the group to use the synergy between all companies and improve the group's position in transport and retail finance while creating a larger financial lending entity with a broader spectrum of offerings.
STFCL & SCUFL are listed companies. Shares of STFC have been moving in a range recently after falling 22.87% in December 2021. The share has not been able to climb back to the level as it closed at Rs 1,149.05 per share. Shares of SCUF have shown similar movement after declining 21.55% in December 2021 as it closed at Rs 1,616.85 per share on Friday.
Article by Aman Agarwal.
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